Realtors Confronting Problems of Structure, Leadership, and Technology

The Definitive Analysis of Negative Game Changers Emerging in Real Estate or D.A.N.G.E.R report prepared for the National Association ofrnRealtors® (NAR) byrnauthor Stefan Swanepoel is blunt in addressing vulnerabilities of thernAssociation itself. Swanepoel is especially critical of NAR’s leadership, arncriticism he levels at state and local associations as well, but we willrnsummarize his review of NAR as of more general interest.  A discussion of the reports methodology andrnits critique of brokers and agents is available here.</p

Swanepoel ranks the 10 dangers to NAR in order of magnitudernbut it is easier to discuss them in groups (that means that the numbers below won’t all be in order) starting with some structural issuesrnwith the Association.  </p

1.     rnThe Decision-Making Structure becomes a Hindrancern(PTI=100)</p

2.     rnThe Three-Tier Structure Liability (PIT=80.0)</p

Tradernassociations are very different than other businesses in that they must satisfyrnmore types of constituents across multiple fronts.  NAR is the world’s largest trade organizationrnwith over a million members, 2,500 of which serve on approximately 80rncommittees and boards.  Its board ofrndirector has 841 voting members. rnDecisions made in such an environment are complex and often unclear andrnNAR is also unique in that it represents both the officers (brokers) and thernrank and file (agents.)    </p

“Leadersrndesiring to win need to be nimble,” and “NAR governance makes it very difficultrnto respond quickly,” Swanepoel says.  He alsorntakes a shot at what he calls “Boomer Generation association groupies” who seernserving on boards as a badge of honor and have become hooked on benefitsrnincluding status and travel.  It is timernfor NAR to let go of this generation he says. </p

Anotherrnstructural problem is its three organizational tiers.  The national, state, and local associationsrnthat were formed in a world that “respected status and seniority” and arernoperating in one that judges them by transparency and accountability.  The state and local associations are somewhatrnakin to franchises where only certain items are shared and many areas where decisionrnmaking is not, thus NAR is often blamed for things over which it actually hasrnno control..</p

6. ThernQuality/Quantity Challenge (PTI=60.0)</p

Anotherrnrelated issue arises because NAR tries to be an association for everyone andrnfor only the best.  A membership drivenrnorganization has a revenue stream dictated by size so leadership on all levelsrnis often torn between decisions serving the best of its membership and those servingrnthe wishes of the majority, two members with very different needs and wants.  It is time to resolve the confusion over whetherrnNAR should be membership driven or focused on a quality professionalrnmembership.</p

Andrnrelated to this:</p

10.  Core Standards are too Low. (PTI=30.0)</p

New corernstandards set out for NAR’s 1,400 local and state associations cover sixrnspecific areas including ethics, advocacy, consumer outreach, obligations tornthe organization itself, technology and financial solvency.  The author says that the need for minimalrnstandards is vital and the fact they needed to be created indicates that somernassociations haven’t taken their obligations seriously enough.  Establishing the standards is only a firstrnstep and should quickly lead to setting benchmarks, monitoring, andrnaccountability. </p

Twornother perceived dangers have to do with the NAR mission:</p

3.     rnNAR is being Out Positioned as IndustryrnSpokesperson (PTI=72.0)</p

4.     rnMission Creep (PTI=64.0)</p

NAR hasrnlong prided itself on being “The Voice of Real Estate” for its members,rnhomeowners, and potential homeowners and its research and statistics are widelyrnquoted. In recent years, however, it has had to share that spotlight with severalrngrowing brands. Notable in the area of real estate data are CoreLogic, thernNational Association of Home Builders (NAHB) and Zillow.  In the homeownership area Zillow has taken arnlarge role as an industry voice with smaller roles played by NAHB and Trulia,rnnow about to merge with Zillow.</p

Over thernlast decade NAR has introduced more than a half dozen new initiatives such asrnTop Level Domains and Realtor University and has been no more or lessrnsuccessful than many companies.  Therndebate is whether such deviation from core roles is a dilution of resources orrna progressive strategy.  </p

5.  rnThe Catch 33- Tech Quandary (PTI=72)</p

NAR hasrnalso widened its mandate to develop several technology initiatives that havernthen had to battle political headwinds. rnThe author cites the Realtors Property Resource, a free membershiprnservice that has been funded since 2009 to the tune of nearly $100 millionrnwhile Redfin, offering a similar service has been better funded and is expectedrnto become a billion dollar IPO in the next year.  </p

NAR doesrnnot have the options of a private company to disinvest as many services arernfree member benefits.  It has also beenrnsaddled with the reputation it isn’t good a developing technology while at thernsame time it is criticized for not being aggressive enough in completing withrnthe private sector in the same space.</p

Finally,rnthe author finds much wrong with both NAR’s membership and leadership.</p

7.rnInsufficient New Blood (PTI=56.0)</p

8.  A shortage of Leadership and Talent (48.0)</p

Realrnestate is seldom a first career choice and there is no mandatory retirement sornagents tend to enter the business late and stay later leading to an increasing medianrnage, now 56 and up five years since 2003. rnNAR needs to encourage young people to consider real estate as a careerrnrather than a later in life fallback.  </p

Likewisernleadership is aging and increasingly finds itself overwhelmed and out of touch.  Further the entire organization, from NAR tornthe smallest brokerages have not planned for a transition to the profit-driven,rnservice-competitive internet-leveraging individuals needed to lead organizedrnreal estate.  </p

The final part of Swanepoel’s report focuses on dangersrnfacing the Multiple Listing Systems.  Hernhas some interesting observations there as well and perhaps we will find therntime and space to explore them at a later date.

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